French industry output surges beyond expectations, pointing to strong end to last year

FILE PHOTO: A ship builder works on a section of the Oasis Class 3 cruise ship under construction at the STX Les Chantiers de l'Atlantique shipyard site in Saint-Nazaire, France, February 17, 2015. REUTERS/Stephane Mahe/File Photo

PARIS (Reuters) - French industrial production posted a surprisingly strong rebound in November, adding to a brightening outlook among both consumers and companies to signal a sharper-than-expected pick-up in activity in the euro zone’s second-biggest economy.

The 2.2 percent rise in French industrial output, which beat even the most optimistic forecast in a Reuters poll of economists, comes after better-than-expected consumer spending figures for the same month.

It suggested an acceleration in French economic activity at the end of the year after two insipid quarters marred by strikes, bad harvests and diminishing tourism.

“This strong reading comes as a positive surprise, although manufacturing surveys had been pointing to a pick-up in sectoral momentum at the end of 2016,” Unicredit economist Tullia Bucco said in a note.

Surveys from the official statistics office INSEE have flagged a surge in morale to multi-year highs amongst both companies and consumers at the end of the year. A low euro has also boosted exports to an 18-month high, with private surveyer IHS Markit flagging an acceleration in factory activity in December.

In November, a 3.4 percent rise in transport material production, which includes cars and aircrafts, was particularly noteworthy, INSEE data showed.

FILE PHOTO: U.S. one hundred dollar bills are seen in this picture illustration, August 2, 2013. REUTERS/Kim Hong-Ji/Illustration/File Photo

The boost comes as Germany, the euro zone’s largest economy, is also showing signs of unexpected strength.

Industry experts and records of aircraft movements show a record burst of activity at Airbus plants in France and Germany at the end of the year to whittle down record order backlogs, with December deliveries on track to set a monthly record for the Toulouse-based company.

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French car sales have also ended the year on a strong note.

Economists took heart in the strong French data, with Barclays’ Francois Cabau raising his fourth-quarter gross domestic product forecast to 0.5 percent from 0.4 percent, while JPMorgan’s Raphael Brun-Aguerre lifted his projection of annualised GDP to 2 percent from 1.25 percent.

However, Natixis’ Philippe Waechter said the significant increase in GDP in the final quarter will not be enough to boost full-year output well above 1.1 percent, below the government’s official forecast of 1.4 percent.